THE COMPARISON BETWEEN FOREIGN DIRECT INVESTMENT AND REPRESENTATIVE OFFICE IN INDONESIA

FINTECH-REGULATION-IN-INDONESIA
FIRST FINTECH REGULATION IN INDONESIA TO REGULATE PEER-TO-PEER LENDING PLATFORMS
June 4, 2017
CAN-A-DIRECTOR-BE-CONSIDERED-AS-A-COMPANY-EMPLOYEE
LEGAL STATUS OF A DIRECTOR IN INDONESIA
June 7, 2017

Indonesian Government gives facilities to Foreign Investor who wants invest in Indonesia. Foreign Investor can establish the Foreign Direct Company (“PT PMA”) or Representative Office (in Bahasa: Kantor Perwakilan Perusahaan Asing, hereinafter briefly referred to as “Rep. Office”).

Investment Coordinating Board (“BKPM”) governed the law of procedure for establishing both legal entity as mentioned above, by issuing the Head of Investment Coordinating Board Regulation Number 14 of 2015 for PT PMA (“Perka 14/2015”) and the Head of Investment Coordinating Board Regulation Number 15 of 2015 for Rep. Office (“Perka 15/2015”). BKPM has authority to give any licenses for PT PMA and Rep. Office before the Foreign Investor conducts the business.

Please be informed that PT PMA is also subjected to Law of Number 40 of 2007 (“Company Law”). PT PMA is must be established by minimum 2 (two) shareholders.  On the other hand, Rep. Office needs no shareholders. PT PMA is also minimum consists of 1 (one) Director and 1 (one) Commissioner. At that, Rep. Office needs 1 (one) person as the Rep. Office as the Chief of Representative Office. Both of that Legal Entity can hire employee either Indonesian or Foreigner.

PT PMA can be fully-owned and partly-owned by Foreign Investors. The limitation of foreign share ownership depends on the business activity which will be run by PT PMA. It stipulated on Investment Negative List (“DNI”).

To make you easier, the following is the comparison between PT PMA and Rep. Office:

Differences

PT PMA

Rep. Office

Legal Basis

  1. Company Law
  2. Perka 14/2015

Perka 15/2015

Paid-Up Capital

Minimum IDR 2,500,000,000 (two billion and five hundred thousand Rupiah)

No

Investment Value

Minimum IDR 10,000,000,000 (ten billion Rupiah)

No

Shareholders

Minimum consists of 2 (two) shareholders

No

Foreign Ownership

fully-owned and partly-owned based on DNI

100% fully-owned

Director and Commissioner

Minimum consists of 1 (one) Director  and 1 (one) Commissioner

No

Chief of Representative

No

Yes

License

Principle License and Business License

Rep. Office License is valid for 3 (three) years and can be renewed twice, for each 1 (one) year.

Activity in Indonesia

Can perform complete business activities

Arrange the company interest or its affiliation company, prepare for establishing and developing the PT PMA or other countries and Indonesia. And also limited to marketing, research, and promotion.

Transaction and Making Revenue

Yes

Rep. Office is not allowed to generate revenue or to conduct direct transactions in Indonesia. The transaction goes directly to company headquarters.

Hire Employee

Yes
Indonesian and Foreigner

Yes
Indonesian and Foreigner

HOW CAN SMART CONSULTING HELP YOU?
To ensure a smooth investment and business operation from the legal perspective, but also still focus on maintaining your business in Indonesia and reach your revenue target, it is advised for you to find capable and trusted lawyers or legal consultants for advice and assistance in ensuring your legal compliance with prevailing laws and regulations.

SMART Consulting is an Indonesian Corporate Legal Services firm. SMART has assisted Clients in dealing with matters related to Investment Law, such as assist Client to establish Foreign Direct Company and Representative Office. We also assist Clients regarding the Compliance and Corporate Legal Services.

Contact Us Now to get your legal solution for your business goals, and still comply with the prevailing laws and regulations.
E: info@smartcolaw.com
H: +62821-1234-1235
O: +6221-80674920

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